Healthcare costs, including pharmaceutical costs, remain a legitimate concern. But the Trump Administration Department of Health and Human Services (HHS) is about to commit a needless unforced error.

The issue in question is an effort to force pharmaceutical companies to announce “list price” of drugs that they advertise.

A similar effort was recently introduced as legislation in Congress by Senator Dick Durbin (D – Illinois), which is itself proof of the wrongfulness of the idea. A coalition of conservative and libertarian voices, including CFIF, stopped Senator Durbin’s effort. But for some reason the HHS announced intent to impose the mandate via regulation, reminiscent of Barack Obama’s “pen and phone” manner of presiding.

Here’s why this is a terrible idea.

First, a drug’s “list price” is more likely to confuse consumers than enlighten them. The reason is that what consumers actually pay for a drug is almost always very different, and much lower, than its list price. Most patients’ drugs are subsidized by co-pays or co-insurance programs, whether via Medicare, Medicaid or insurance companies. Insurance companies themselves typically don’t even pay the full list price, since they also receive various rebates and discounts from pharmaceutical sellers. Overall, approximately 9 out of 10 consumers pay below the technical list price. Consequently, compelling advertisers to state the list price in ads would mislead consumers into assuming that their out-of-pocket cost would be higher than they price they’d actually pay.

That hardly advances the goal of informing consumers.

An even more fundamental problem with the contemplated HHS mandate is that it would violate the First Amendment by compelling speech.

Under First Amendment free speech application, including commercial speech, courts strictly scrutinize any effort by government to force private citizens or entities to what it wants them to say. Only where the compelled speech is purely factual and non-controversial will allow exceptions to the general prohibition against compulsory words. As noted above, a drug’s list price doesn’t qualify as purely factual for purposes of informing consumers, because consumers rarely pay that price. Nor does the HHS proposal qualify as non-controversial, for obvious reasons.

Accordingly, a government attempt to force advertisers to state prices that are higher than what almost all consumers actually pay can’t withstand First Amendment scrutiny, and will be struck down when challenged in court.

Finally, the HHS doesn’t even possess authority to impose this proposed mandate. That authority under Congressional statute instead lies with the Food and Drug Administration (FDA). Proponents of the HHS mandate assert that the Social Security Act provides a loophole to force this proposal upon the pharmaceutical market, but that too won’t withstand court scrutiny.

For all of these reasons, the HHS proposal to engage in compulsory speech, speech that isn’t even accurate or informative, is a head-scratcher. Hopefully it will reconsider this ill-advised effort sooner rather than later, and pursue more effective ways of reducing pharmaceutical and healthcare costs.